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Technology connects Aleutian Islands to mortgage grid

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OKLAHOMA CITY - It seems an unlikely combination, a housing authority serving the remote Aleutian Islands of Alaska, a mortgage lender here in the heartland of the country, an agency in the nation's capital and an insurer on the West Coast.

But through the linking power of the Internet, this unusual rectangle is providing housing finance to Alaska Natives.

Here's how it works. The Aleutian Housing Authority, based in Anchorage, has been sponsored by First Mortgage here, to use Washington, D.C.-based Fannie Mae's Web-based automated underwriting technology to make mortgages to its members insured by PMI Mortgage Insurance Co. in San Francisco.

The housing authority basically will act as a broker for First Mortgage, referring its members to the mortgage banking company and qualifying them for loans in minutes in Alaska using Fannie Mae's high-tech Desktop Originator on the Web. First Mortgage will extend the loans and sell them to Fannie Mae, which buys mortgages to make markets for lenders like First Mortgage.

Although it sounds complicated, it's working. Eleven mortgages have been approved in the first two months of operations.

The authority is not limited to just the Aleutians, but also serves members of its 12 tribes who live in California, Oregon, Washington state, and New Jersey.

The unlikely alliance came about as a result of a meeting between the housing authority and Jean Garrison, PMI's Indian country representative, in Alaska last summer. A deal in Oklahoma earlier this summer set her to thinking the arrangement would work with the Aleutian Housing Authority, as well, and she set the wheels in motion.

Desktop Originator, or DO, is Fannie Mae's automated loan origination technology. It will allow the housing authority quick access to all of Fannie Mae's loan products, as offered through First Mortgage, whose president, Ron McCord, is nationally known as a former president of the Mortgage Bankers Association of America.

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The products include Fannie Mae's Native American Conventional Lending Initiative, a program to make mortgages to Native Americans on reservation trust lands, where lending is more difficult than on private property.

Borrowers will have access to low down payments and credit flexibility, putting up as little as 1 percent of the price of the home as a downpayment. An additional 2 percent can come from the tribe or as a gift. PMI Mortgage Insurance will provide mortgage insurance on the loans. Any loan where the borrower pays less than 20 percent down must have mortgage insurance before Fannie Mae will buy it.

In addition, Aleutian Housing Authority members will have access to a flexible underwriting program called Timely Payment Rewards. Borrowers with damaged credit get automatic reductions in their interest rates if they make their home payments on time for 24 months.

The housing authority represents the Agadaagux, Akutan, Belkofski Village Council, False Pass Traditional Council, Native Village of Atka, Nelson Lagoon Tribal Council, Nikolski IRA Council, Pauloff Harbor Tribe, Quagan Tayagungin Tribe, Qawalangin Tribe, St. George Traditional Council and Unga Tribal Council.

It is the second tribal housing authority sponsored by First Mortgage under this program. The first is the Tribal Housing Authority of the Choctaw Nation, based in Durant where Fannie Mae will buy loans originated through the housing authority by First Mortgage, and PMI will insure them.

Fannie Mae has agreed to buy up to $25 million in mortgages through the Choctaws whose housing authority serves tribal members in California, Arizona, Washington, Arkansas, Texas, New Mexico and Oregon and Oklahoma.

The Choctaw Homebuyers Advantage Program will be able to provide downpayment assistance to members, and the housing authority will provide homebuyer education.

First Mortgage's McCord also was involved in an American Indian deal last year with Fannie Mae and PMI, when Fannie Mae put together a $10 million mortgage program for the Apache Tribe of Oklahoma, based in Anadarko. McCord is president of Holliday American Mortgage Co. which was one of two lenders in that deal. First National Bank & Trust of Shawnee also participated.

The Housing Authority of the Apache Tribe of Oklahoma is providing downpayment assistance for tribal members, while Native American Housing Services Inc., a non-profit, educates homebuyers.